Subject Line Ideas: Why the wait?
Lower down payment isn’t always best
You don’t even want to know (Funny)
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Feature Article: Why the wait?
Critical Reads: Lower down payment isn’t always best
The Funnies: You don’t even want to know
If you pay attention to all the surveys out there – and there are a lot – you know that this notion of Americans no longer desiring homeownership is a myth. Nearly every study, research project, survey, etc. done reveals that people do, in fact, still WANT to own homes. But there’s also no denying that many are waiting longer to buy a home then previous generations did. Why is that?
If you’re ready, let's dig in...
Why the Wait?
You’ve been hearing for years that those of a certain age group aren’t interested in buying homes. We’re going to omit the popular name given to this generation, as it already appears to often in real estate news, but let’s establish something right away:
This nameless generation (it rhymes with smillennials), in every survey, study, etc. responds in the overwhelming majority that it still wants homeownership.
Contrary to what the Chicken Little mass media sells, owning a home isn’t off the table. It’s just that the age group that has traditionally represented the bulk of first-time homebuyers is arriving at the table a little later than previous generations did.
According to a recent Zillow study, the median age of a first-time buyer these days is 33. A generation ago, it was about three years younger. That the difference, despite all the hand-wringing, isn’t all that dramatic is a different subject for a different time. The study also revealed that the typical first-time buyer now rents for six years before buying, as opposed to 2.6 years back in the 1970s. Is that all that surprising?
Think of how society has changed since the 70s. Roles of gender, family and other aspects of young adulthood have changed. More women work now than they did back then. Young adults are waiting longer to get married than their parents did. And they’re waiting longer to have children. In short, young adults are waiting longer to do a lot of things, not just waiting longer to buy a house.
And these things are related. If you can peg two big life events that have always been linked to buying a home, they’re marriage and having kids. It makes total sense, then, that as these things are delayed, so will homeownership be delayed. It’s not rocket science.
We don’t see news reports about waiting to get married or have kids simply because these things don’t have the same impact on the overall economy that buying homes does. The homeownership aspect of these related delays gets the attention because, especially after a housing-related recession, a prolonged real estate slump is worrisome.
So we look for answers other than the societal ones right in front of our noses. Student loan debt is an easy way to explain the falling homeownership figures for young adults. It’s also a kind of lazy way. Research has shown that homeownership rates for the age group in question have dropped by almost an identical rate in those with and without student loan debt. It’s not as though it’s just the 20-somethings with student loans are the only ones delaying homeownership.
In fact, you could argue to some degree that the rock-bottom interest rates of today act to somewhat counter-balance the upward trend in student-loan debt. A typical college graduate who a decade ago might have had $200 per month less in student-loan obligations was also likely to pay nearly that much more in a monthly mortgage payment.
A $100,000 mortgage balance at 4 percent, for example, carries a principal-and-interest payment of $478 a month. At 7 percent, not unheard of all that long ago, it’s a monthly payment of $667. From both qualifying and budgeting standpoints, the difference is negligible.
Perhaps the bigger issue, and one only touched upon by the news, is the rapid rise in rental rates since the recession ended. The combination of higher student loan debt and higher rents can easily contribute to an individual’s inability to save for a down payment on a home. It’s easy for people to say “they’re living in their parents basement” with a nose in the air, critical of lower homeownership rates. But what if living with your parents for a couple of years so that you can save what you would have spent on rent for a down payment on a home is what people are choosing to do? Is that all that bad a strategy if Mom and Dad are cool with it?
Maybe these young adults, these basement dwellers we criticize, are actually being responsible when it comes to homeownership.
Just like someone who’s not yet ready to get married or bring children into the world waits until they’re in a better position.
Maybe instead of asking “Why wait?” we should really be asking “What’s the hurry?”
A Lower Down Payment Isn’t always Best
A recent study has shown that more people consider buying a home when the down payment requirement is lower. It’s especially the case with first-time homebuyers, but lower down payments are often seen as giving more people access to homeownership. As this MainStreet.com article explains, however, low down payments aren’t always the best option.
What’s the Best Home Security System?
As technology has evolved, so have home security systems. As the new smart-home era dawns, in fact, protecting your home and its contents – including yourself – has gotten as sophisticated as its ever been. This Freshome.com article takes a very comprehensive look at home security systems and has determined which is best for your home.
9 Simple Beliefs that Will Make You Happier
We all know someone who believes that well-off people simply have good luck or hit some sort of lottery. In truth, this belief about how others acquire wealth actually limits one’s own prospects for it. Holding certain beliefs and outlooks can help us or hinder us, and this article from Inc. outlines nine simple beliefs that can make you happier.
You Don’t Even Want to Know
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